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Unlike many law firms that are unable to grow and prosper because their partners clash over “my book of business” vs. “firm revenue,” it’s the prevalent view that midsized CPA firms should strive for strong leadership and tight management, that their partners should look and act as a team and that their clients become “institutionalized.” As such, many midsized CPA firms work hard at the notion of “firm clients” and not “individual partner clients.” This is a visible sign of a well-managed firm.

But while many midsized CPA firms strive to be well-managed, many fall short of this ideal state and revert to the loosely managed style at midsized law firms that allows for operating silos.

When I hear a partner at a midsized CPA firm say, “my client” or “my book of business,” the hair on the back of my neck stands up because such a reference is code for a partner who operates in a silo. When CPA firm leaders hear one of their partners say these words, they should be wary, but many are not, even though there’s a good chance that, sooner or later, such a partner will financially hurt the firm and hold it back from cross-selling to its client base and institutionalizing client relationships.

The operating silo mentality eventually hurts a firm’s growth and bottom line. Even though CPA firm partnership agreements contain covenants not to compete provisions, with organic growth so difficult to come by, many midsized CPA firms are more than happy to bring laterals into their partnerships and, if clients follow (and many often do), fund the liquidating damages due the former firm.

So, how does a midsized CPA firm develop a culture that has “firm clients,” and there’s no such thing as “my client” and “my book of business”?

It requires a one-firm, entrepreneurial approach to management, which in turn, leads to a well-managed firm. That’s easier said than done, but it’s achievable by firms with strong and effective leadership. It requires considerable discipline and a strong commitment to partners, staff, clients and the community.

Here are a few examples of a one-firm, entrepreneurial approach to management that creates an environment of “firm clients” and “firm revenues”:

  • Strive for a shared vision about the future and the strategies (with partner accountability) that will help achieve success.
  • Reach for significant firm loyalty and team effort by placing greater emphasis on firmwide coordination of decision making, group identity, cooperative teamwork and institutional commitment.
  • Emphasize that long hours and hard work demonstrate high involvement and commitment to the firm.
  • Place an emphasis on continuous education on firm policies, procedures and protocols.
  • Insist on a sound economic model that rewards consistent performance.
  • Insist on sound corporate governance that “walks the talk.”
  • Attract and retain first-class partners who understand how to build lasting business relationships with clients and contacts.
  • Create a business development culture that includes everyone within their capacity and skill set.
  • Make it well known that the firm wants marquee clients who build brand awareness and credentials and not simply volume for volume’s sake.
  • Develop partner goals, holding partners accountable for delivering results, and award compensation when goals are achieved both individually and collectively.
  • Understand that the firm needs to demonstrate it differentiates itself by bringing value to clients that’s measurably better than competitors. This can be readily achieved when firms institutionalize their approach to client service and expectations by consistently providing byproducts of compliance services such as EBITDA and working capital improvements.
  • Going to market with industry-dedicated client service teams.
  • Approach client service with multidisciplinary client service teams of audit, tax and advisory professionals.
  • Looking for smart mergers and lateral hires that add to a firm’s strengths, improve its weaknesses and expand its footprint.
  • Require consistent and persistent leadership by senior partners with a no-tolerance view on individual partners who think of themselves as “stars” and more important than the firm collectively.

Many small and midsized CPA firms fail to achieve enduring success because their leadership lacks the intestinal fortitude required to be regarded as a well-managed firm. Without strong leadership, operating silos eventually creep into the culture. These operating silos break down the DNA or fabric of a firm. A one-firm, entrepreneurial approach to management is the key to endurance. While it isn’t easy to achieve or maintain, it certainly bears considerable fruit.

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Practice management Client strategies Client relations Business development Partnerships Dom Esposito
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